Bank April projections

Press, 4 April 1987, Page 25

Bank April projections

Wellington The Reserve Bank has released liquidity projections for April, indicating the overall influence on primary liquidity arising from the forecast net public sector influence and expected operations during the month: The bank’s deputy governor, Mr Lindsay Knight, emphasised that actual daily levels of primary liquidity could be expected to fluctuate around projected levels because of the difficulty in forecasting daily liquidity flows accurately. The forecasts should therefore be used with care, Mr Knight said.

He said that the average PL level for the month was expected to be around $3BO million, which was consistent with the average levels attained before the seasonal February and March build-up associated with the March tax drain. The PL level would be relatively higher in the second half of the month with the entry to PL of SI3OM of Government stock on April 15.

Mr Knight said the bank expected to conduct a swap operation in April with late May and June bills being offered as a replacement for late April bills. This operation would assist in meeting the

target April PL levels and in providing an adequate level of discountable securities in May and June. Mr Knight said that PL would increase by SI7SM before Treasury bill tenders and open market operations in April. That was largely due to the sellback maturities in the month being offset by a net fiscal injection, maturing non-discountable securities recently issued to the Post Office Bank, Ltd, and Government securities entering PL. However, when expected tenders and open market operations . in April were taken into account, the increase in PL should only be S7OM over the month.